During Wednesday’s US market session, crypto traders saw a brief relief from the correction trend as Bitcoin held above $90,000. The meme industry, known for its volatility and sensitivity to speculative trading, reacted quickly to this change. As a result, Dogecoin surged 4%, reclaiming the $0.4 mark and hinting at a potential bullish breakout of its channel setup.
According to CoinmarketcapDOGE’s market capitalization is $59.16 billion, while it is $6.8 billion.
Highlights
- The Dogecoin price breakout from the channel pattern signals the continuation of the current uptrend.
- The $0.44 region constitutes a key resistance area for market buyers.
- The potential formation of a double top reversal pattern could invalidate the bullish thesis.
Dogecoin price signals end of correction trend
Last week in November, selling pressure on pioneer cryptocurrency Bitcoin increased from $98,800. The pullback sparked a correction trend in the altcoin market, with the meme cryptocurrency expiring significantly.
Thus, the dog-themed memecoin DOGE plunged from $0.48 to $0.39, or $17.15. An analysis of the 4-hour chart shows that the retracement resonated strictly within two descending parallel trendlines exhibiting a channel pattern formation.
Typically, the two trendlines act as dynamic resistance and support before offering a major reversal after a breakout. With today’s price rally, Dogecoin price flips the overhead trendline into potential support, signaling the continuation of the prevailing uptrend.
With supported buyers, the DOGE Price could surge 20% to break $0.48 resistance and target $0.5. To achieve this rally, a daily candle closing above the $0.44 resistance is needed this week.
Bearish Divergence Signals Potential Double Top Formation
While the recent market correction has helped buyers reclaim exhausted bullish momentum, the Dogecoin the price may struggle to break the $0.438 barrier. The daily long wick rejection candle at the aforementioned level indicates that sellers are aggressively defending this level.
Additionally, the RSI (Relative Strength Index) indicator shows a new lower high formation up to a price high at $0.44, suggesting a loss of bullish momentum. The bearish divergence also projects the potential formation of a well-known reversal pattern called a double top.
If the channel breakout fails, Dogecoin price could extend the correction with a double top and break through the $0.34 support.